{"data":{"id":"us-ky/krs-304.15-342","jurisdiction":"us-ky","citation":"KRS 304.15-342","heading":"Adjusted premiums operative at option of insurer or on January 1,","body":"1989.\n(1) This section shall apply to all policies issued on or after the effective date of this\nsection as defined in subsection (11) of this section. Except as provided in\nsubsection (7) of this section, the adjusted premiums for any policy shall be\ncalculated on an annual basis and shall be such uniform percentage of the respective\npremiums specified in the policy for each policy year, excluding amounts payable as\nextra premiums to cover impairments or special hazards and also excluding any\nuniform annual contract charge or policy fee specified in the policy in a statement of\nthe method to be used in calculating the cash surrender values and paid -up\nnonforfeiture benefits, that the present value, at the date of issue of the policy, of all\nadjusted premiums shall be equal to the sum of:\n(a) The then present value of the future guaranteed benefits provided for by the\npolicy;\n(b) One percent (1%) of either the amount of insurance, if the insurance is\nuniform in amount, or the average amount of insurance at the beginning of\neach of the first ten (10) policy years; and\n(c) One hundred twenty -five percent (125%) of the nonforfeiture net level\npremium as hereinafter defined.\nProvided, how ever, that in applying the percentage specified in (c) above, no\nnonforfeiture net level premium shall be deemed to exceed four percent (4%) of\neither the amount of insurance, if the insurance is uniform in amount, or the average\namount of insurance at the  beginning of each of the first ten (10) policy years. This\ndate of issue of a policy for the purpose of this section shall be the date as of which\nthe rated age of the insured is determined.\n(2) The nonforfeiture net level premium shall be equal to the pr esent value, at the date\nof issue of the policy, of the guaranteed benefits provided for by the policy divided\nby the present value, at the date of issue of the policy, of an annuity of one (1) per\nannum payable on the date of issue of the policy and on ea ch anniversary of such\npolicy on which a premium falls due.\n(3) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled\nchanges in benefits or premiums, or which provide an option for changes in benefits\nor premiums other than  a change to a new policy, the adjusted premiums and\npresent values shall initially be calculated on the assumption that future benefits and\npremiums do not change from those stipulated at the date of issue of the policy. At\nthe time of any such change in the benefits or premiums the future adjusted\npremiums, nonforfeiture net level premiums and present values shall be recalculated\non the assumption that future benefits and premiums do not change from those\nstipulated by the policy immediately after the change.\n(4) Except as otherwise provided in subsection (7) of this section, the recalculated\nfuture adjusted premiums for any such policy shall be such uniform percentage of\nthe respective future premiums specified in the policy for each policy year,\nexcluding amounts payable as extra premiums to cover impairments and special\nhazards, and also excluding any uniform annual contract charge or policy fee\nspecified in the policy in a statement of the method to be used in calculating the\ncash surrender values and p aid-up nonforfeiture benefits, that the present value, at\nthe time of change to the newly defined benefits or premiums, of all such future\nadjusted premiums shall be equal to the excess of (a) the sum of the then present\nvalue of the then future guaranteed  benefits provided for by the policy and the\nadditional expense allowance, if any, over (b) the then cash surrender value, if any,\nor present value of any paid-up nonforfeiture benefit under the policy.\n(5) The additional expense allowance, at the time of the change to the newly defined\nbenefits or premiums, shall be the sum of:\n(a) One percent (1%) of the excess, if positive, of the average amount of\ninsurance at the beginning of each of the first ten (10) policy years subsequent\nto the change over the ave rage amount of insurance prior to the change at the\nbeginning of each of the first ten (10) policy years subsequent to the time of\nthe most recent previous change, or, if there has been no previous change, the\ndate of issue of the policy; and\n(b) One hundr ed twenty-five percent (125%) of the increase, if positive, in the\nnonforfeiture net level premium.\n(6) The recalculated nonforfeiture net level premium shall be equal to the result\nobtained by dividing (a) by (b) where:\n(a) Equals the sum of:\n1. The nonforfeiture net level premium applicable prior to the change times\nthe present value of an annuity of one (1) per annum payable on each\nanniversary of the policy on or subsequent to the date of the change on\nwhich a premium would have fallen due had the chang e not occurred,\nand\n2. The present value of the increase in future guaranteed benefits provided\nfor by the policy, and\n(b) Equals the present value of an annuity of one (1) per annum payable on each\nanniversary of the policy on or subsequent to the date of change on which a\npremium falls due.\n(7) Notwithstanding any other provisions of this section to the contrary, in the case  of a\npolicy issued on a substandard basis which provides reduced graded amounts of\ninsurance so that, in each policy year, such policy has the same tabular mortality\ncost as an otherwise similar policy issued on the standard basis which provides\nhigher un iform amounts of insurance, adjusted premiums and present values for\nsuch substandard policy may be calculated as if it were issued to provide such\nhigher uniform amounts of insurance on the standard basis.\n(8) All adjusted premiums and present values refe rred to in this section shall for all\npolicies of ordinary insurance be calculated on the basis of the commissioners 1980\nstandard ordinary mortality table or at the election of the insurer for any one (1) or\nmore specified plans of life insurance, the com missioners 1980 standard ordinary\nmortality table with ten -year select mortality factors; shall for all policies of\nindustrial insurance be calculated on the basis of the commissioners 1961 standard\nindustrial mortality table; and shall for all policies is sued in a particular calendar\nyear be calculated on the basis of a rate of interest not exceeding the nonforfeiture\ninterest rate as defined in this section for policies issued in that calendar year.\nProvided, however, that:\n(a) At the option of the insure r, calculations for all policies issued in a particular\ncalendar year may be made on the basis of a rate of interest not exceeding the\nnonforfeiture interest rate, as defined in this section, for policies issued in the\nimmediately preceding calendar year;\n(b) Under any paid -up nonforfeiture benefit, including any paid -up dividend\nadditions, any cash surrender value available, whether or not required by KRS\n304.15-310, shall be calculated on the basis of the mortality table and rate of\ninterest used in deter mining the amount of such paid -up nonforfeiture benefit\nand paid-up dividend additions, if any;\n(c) Any insurer may calculate the amount of any guaranteed paid-up nonforfeiture\nbenefit including any paid -up additions under the policy on the basis of an\ninterest rate no lower than that specified in the policy for calculating cash\nsurrender values;\n(d) In calculating the present value of any paid -up term insurance with\naccompanying pure endowment, if any, offered as a nonforfeiture benefit, the\nrates of morta lity assumed may be not more than those shown in the\ncommissioners 1980 extended term insurance table for policies of ordinary\ninsurance and not more than the commissioners 1961 industrial extended term\ninsurance table for policies of industrial insurance;\n(e) For insurance issued on a substandard basis, the calculation of any such\nadjusted premiums and present values may be based on appropriate\nmodifications of the aforementioned tables;\n(f) For policies issued prior to the operative date of the valuation manual, any\nCommissioner's Standard ordinary mortality tables, adopted after 1980 by the\nNational Association of Insurance Commissioners, that are approved by\nregulation promulgated by the commissioner for use in determining the\nminimum nonforfeiture stand ard may be substituted for the commissioners\n1980 standard ordinary mortality table with or without ten -year select\nmortality factors or for the commissioners 1980 extended term insurance\ntable;\n(g) For policies issued on or after the operative date of the  valuation manual, the\nvaluation manual shall provide the Commissioners' Standard mortality table\nfor use in determining the minimum nonforfeiture standard that may be\nsubstituted for the Commissioners' 1980 Standard Ordinary Mortality Table,\nwith or without Ten-Year Select Mortality Factors, or for the Commissioners'\n1980 Extended Term Insurance Table. If the commissioner promulgates an\nadministrative regulation adopting any Commissioners' Standard ordinary\nmortality table, adopted by the NAIC, for use in determining the minimum\nnonforfeiture standard for policies issued on or after the operative date of the\nvaluation manual, then that minimum nonforfeiture standard supersedes the\nminimum nonforfeiture standard provided by the valuation manual;\n(h) For poli cies issued prior to the operative date of the valuation manual, any\nCommissioners' Standard industrial mortality tables, adopted after 1980 by the\nNational Association of Insurance Commissioners, that are approved by\nregulation promulgated by the commissi oner for use in determining the\nminimum nonforfeiture standard may be substituted for the commissioners\n1961 standard industrial mortality table or the commissioners 1961 industrial\nextended term insurance table; and\n(i) For policies issued on or after the  operative date of the valuation manual, the\nvaluation manual shall provide the Commissioners' Standard mortality table\nfor use in determining the minimum nonforfeiture standard that may be\nsubstituted for the Commissioners' 1961 Standard Industrial Mortal ity Table\nor the Commissioners' 1961 Industrial Extended Term Insurance Table. If the\ncommissioner promulgates an administrative regulation adopting the\nCommissioners' Standard industrial mortality table as adopted by the NAIC,\nfor use in determining the m inimum nonforfeiture standard for policies issued\non or after the operative date of the valuation manual, then that minimum\nnonforfeiture standard supersedes the minimum nonforfeiture standard\nprovided by the valuation manual.\n(9) (a) For policies issued p rior to the operative date of the valuation manual, the\nnonforfeiture interest rate per annum for any policy issued in a particular\ncalendar year shall be equal to one hundred twenty -five percent (125%) of the\ncalendar year statutory valuation interest rat e for such policy as defined in\nKRS 304.6 -130 to 304.6 -180, inclusive to the nearer one quarter of one\npercent (0.25%), except that the nonforfeiture interest rate shall not be less\nthan four percent (4%).\n(b) For policies issued on or after the operative date of the valuation manual, the\nnonforfeiture interest rate per annum for any policy issued in a particular\ncalendar year shall be provided by the valuation manual.\n(10) Notwithstanding any other provision in this code to the contrary, any refiling of\nnonforfeiture values or their methods of computation for any previously approved\npolicy form which involves only a change in the interest rate or mortality table used\nto compute nonforfeiture values shall not require refiling of any other provisions of\nthat policy form.\n(11) Any insurer may file with the commissioner a written notice of its election to\ncomply with the provisions of this section after a specified date before January 1,\n1989, which shall be the effective date of this section for such insurer. I f an insurer\nmakes no such election, the effective date of this section for such insurer shall be\nJanuary 1, 1989.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=44440","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:44Z","sha256":"88007133fd0369098fc424bd990f51f6f9b065aa440458d208eeaaf0eba66df1","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.15-340","next":"us-ky/krs-304.15-344"},"notice":"GroundRules: Original legal text. Not legal advice."}